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Last Updated: 12/15/2017

Allocation of Adjustments

An estate or trust with $600 or more in Minnesota gross income must file a state return (Form M2, Income Tax Return for Estates and Trusts). Beneficiaries who receive income from the trust must file a Minnesota return if they meet the state’s filling requirements (Form M1, Individual Income Tax).

Any income adjustments that an estate or trust reports on Form M2 must be allocated between the fiduciary and beneficiaries, as follows:

  • If the trust or estate retains all the income, allocate the adjustments entirely to the fiduciary.
  • If all of the income is distributed, allocate the adjustments entirely to the beneficiaries, based on their share(s) of the net distributable income. 
  • If part of the income is retained and part distributed, allocate the adjustments to the fiduciary and beneficiaries as instructed on Form M2.
  • If there is no distributable net income, allocate the adjustments to the beneficiaries, based on their share(s) of the estate or trust.

For more information, see “Allocation of Adjustments” in the Form M2 instructions.